Nanny Contracts in Canada – Basic Employment Law Concepts [video]

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When hiring nannies, most people have no understanding of the legal concepts that apply to that relationship. Is nanny an employee, or an independent contractor? Does a nanny have any rights under the provincial employment legislation? This lecture explains these basic concepts.

This lecture is taught by Amer Mushtaq, LL.B., M. Engineering , B.Sc. (Hons.), who is the Principal and Founder of Formative LLP.   Through his YouTube channel, YouCounsel, Amer shares practical advice from his years of legal experience to help anyone access justice and achieve their goals.  Subscribe today to learn more.

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Welcome everyone, this is Amer Mushtaq from You Counsel. Today, we’ll talk about Nanny Contracts in Canada and we’ll explain some of the basic Employment Law concepts, so, that if you are hiring or deciding to hire a nanny you have a basic understanding of what should be contained in that contract with that nanny. And conversely, if you are a nanny looking for an employment the concepts that we provide here are useful to you, so, you can understand better your employment relationship with your employer. The concepts that we’re providing here are very, very, basic, it gives you an overview of the relationship so you can understand in the Employment Law contexts, and then based on that you can develop contracts accordingly.

We will begin with the disclaimer that this course is not legal advice, so, if you have any specific questions with respect to your nanny issues or contracts you must contact a lawyer or another legal professional.

So we’ll begin with the basic concept whether a nanny is an employee or an independent contractor and what I want to explain here, is that the two are different categories … you may know about them or you may not but employee and an independent contractor are two very different categories. They have completely different rights, they have completely different protections, and they have completely different tax treatment. So, you need to understand when you’re hiring a nanny or being hired as a nanny, whether you are going to be an employee or whether you are going to be an independent contractor.

If you are an employee, then your rights are all of the rights that are under Provincial Employment Legislation. Those rights come to you as a default. So, if you are the employer you are trying to hire a nanny and you hire that nanny as your employee then all of their rights in your specific Provincial Employment Legislation would apply. In the case of Ontario, the legislation is Employment Standards Act 2000, and you can type that thing, that name, in Google and you can find out that legislation and read that. It’s a quite extensive legislation, it talks about all kinds of issues so it’s a bit of a complex piece of legislation, but at least when you read it, you will get a sense of what are the kinds of rights that an employee is entitled to. So, this legislation applies to all of the employees, so, it’s not … there are no specific categories for nannies but it applies to every single employee that works in Ontario.

Some of the things that you will find in this legislation will deal with the work hours, the scheduling, the break times, the free breaks, the unpaid breaks, vacation, vacation pay, public holiday pay, overtime hours, sickness pay, maternity leave, bereavement leave, all kinds of things that an employee is expected to go through during his or her employment they are dealt with in that employment centers legislation; and then those rights will be intact for the employee.

With respect to independent contractors, an independent contractor is not an employee. So, the relationship is really sort of a business relationship and the rights of an independent contractor and the duties are what’s in the contract. Whatever’s in the contract, that’s what is upheld when, there is a dispute between the employer and the independent contractor. So, independent contractor has no protections under the statutory legislation, Employment Standards Act 2000, doesn’t apply and any of the other provincial legislation they don’t apply with respect to an independent contractor.

Okay, so then the question becomes if you are the employer can you choose, can you decide whether you want to hire somebody as an employee or as an independent contractor? And the answer really is yes and no. The typical lawyer answer or the next answer I can give you is it depends. And what it depends on is really on the nature of the relationship that you establish with that nanny or if your nanny what kind of relationship are you establishing with that family. And with respect to how do you decide whether somebody is an employee or an independent contractor, we have a completely separate video on this, and I will encourage you to check that out, so, you can understand the difference between an employee and an independent contractor.

But very, very, briefly and I would really encourage you to review that video because that provides a fulsome answer. But very briefly, an independent contractor, in other words, is sort of a separate business, and what that means is the person and it doesn’t have to be a corporation, you could have an independent contractor relationship with an individual too. So I’ll give you an example, when you hire a plumber to come and fix your plumbing issues at your house that plumber is an independent contractor. Why, because the plumber knows how to do his job or her job, you don’t need to explain how to fix it, you don’t need to supervise the plumber, you don’t need to control the hours that he or she will spend fixing that problem. The plumber will bring his own tools, you know his own equipment, and he may actually run to Home Depot to buy stuff for you, so, all of these things indicate that the person is quite independent in the performance of the duty. And then when the plumber is done with your job, he may have another job lined up at some somewhere else, at somebody else’s house. So, what that means is the Plumber is not financially dependent on you to make a living on a day-to-day basis. So, you don’t have significant control over the plumber. So, that’s sort of an extreme example of an independent contractor.

But in nanny cases, you may have a relationship with a nanny, where the nanny is very independent. So, for instance the nanny knows what time to come to the house, and then when she comes over or he comes over, you hand over the kids and then you’re gone. And the nanny decides, you know, what kind of food the children are going to have today, what kind of clothes they are going to wear, are they going to go to a park, or are they going to go to somewhere else and all of that. So, if the nanny has a lot of flexibility and then maybe the nanny brings his or her own van and to take the kids around, so, that’s bringing her own tools. Maybe she’s buying other stuff for the children and gets reimbursed for those expenses. So, you can see how the relationship could be quite independent and then the nanny maybe part time and maybe helping out other families as well or maybe joint nanny for a few families. So, it could be an independent relationship even though you have hired the nanny to come and do certain specific tasks.

So, that’s what I mean by when I say the answer is yes and no and it depends it really depends upon the nature of the relationship that you are establishing. And what you want to know is that if you establish the relationship, which is independent contractor, you want to make sure that the law recognizes that relationship as an independent contractor. It’s not really up to you, it’s not really up to parties, because a number of government institutions have some stakes in how people are classified as an employee or as an independent contractor and the most obvious one is C.R.A., because when someone is an employee you as an employer deduct taxes and send it to C.R.A. Whereas if someone is an independent contractor they are responsible for their own taxes. Similarly, Employment Insurance Legislation with respect to an employee, if they work certain hours and they lose their job, they’re entitled to employment insurance or if they get sick they may be entitled to employment insurance, and similarly with respect to pregnancies and in other scenarios they may be entitled to employment insurance. But as an independent contractor you’re not entitled to any of those things, so that’s why you want to be careful in ‘A’, selecting what kind of relationship you want and then also making sure that the relationship is lawful.

One thing you can do is obtain an advance ruling from Canada Revenue Agency about your specific relationship and it’s not a complicated process. You basically write down the specific duties that that person, that nanny, will be providing to you and you figure out exactly how that relationship is going to be structured, and then you send that structure to C.R.A. and say we’re going to engage in this relationship … can you provide us a ruling whether this relationship, would you treat this relationship as an employment employee-employer relationship or would you accept the notation of independent contractor? And you can get that advance ruling and with respect to C.R.A. matters you can you can rely on it.

So, those are some of the things that you want to keep in mind with respect to nanny contracts. Few things that I want you to take away from this, is that it’s very important to have your contracts any contract, whether it’s nanny contracts or general contractor work for your house you should have those in writing.

A contract could be oral, you can agree to things orally but as you can imagine, with oral contracts it comes down to who said what, who remembers what, it becomes a he said, she said. But at least in written contracts there is something in writing and it’s somewhat easier to identify what was agreed upon. So, always make sure that there are contracts in writing. And also you want to make sure that whatever you agreed to in those contracts, the contracts must be signed before the nanny commences work. It cannot be that you have a nanny starting already started working for you and then you create this contract and have him/her sign that, you will have other problems with respect to the enforceability of that contract and will have probably a separate lecture on that, but any agreements any contracts that you signed with a nanny you must do so before you commence, before the nanny commences work for you.

So, hopefully this gives you a broader understanding of what a nanny contract is and the differences between the employer-employee relationship and an independent contractor relationship. We look forward to hearing from you about any specific questions you may have with respect to these legal principles and then we’ll be happy to keep building on this topic and provide more information.

I quickly Googled online to see if there were any nanny contracts and I noticed that there are few websites that may have some sample nanny contracts that you can look at. But the basic idea is you need to understand what kind of relationship you’re entering into and to make sure that relationship is in writing and the relationship is lawful, and you understand completely what your rights and obligations are with respect to that relationship.

Hopefully we’ll hear from you and then please look at our other video, so, you can get an understanding off the difference between an independent contractor and an employee. Thanks for watching.

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